Del Monte

Del Monte: Maybank-KE lifts TP to $1.30 from $1.05, reiterates Buy. Says it is pleasantly surprised by Del Monte’s purchase of the consumer business of Del Monte Foods (DMF) – its original parent in the US – in a deal worth US$1.675b. This will change the profile of Del Monte dramatically, into a global foods company that owns one of the most iconic brands in the world. Based on the latest financials, the acquisition works out to 9.4x EV/EBITDA (14.5x P/E), which compares favorably to the most comparable recent transaction of Lucozade / Ribena (13.5x EV/EBITDA). Even in a bear case scenario, the deal is significantly accretive. There is a good fit between the two entitles, as they operate in different geographies. Synergies would likely come from brand ownership and cost savings in certain food production. Furthermore, there are pockets of opportunities such as the US juice market, fruit-cups, US Filipinos consumer for sauces and South America which is untapped.